EXHIBIT 10.1
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT ("AGREEMENT") dated as of this 1st day of October, 2002
by and among HIGOAL DEVELOPMENT LIMITED, a Cayman Islands company ("HDL"), the
Shareholders of HDL identified on Schedule I hereto (the "HDL Shareholders"),
Xxxx Xxx An ("Xxxx"), as agent for the HDL Shareholders, and KID CASTLE
EDUCATIONAL CORPORATION, a Florida corporation ("KCEC").
RECITALS
WHEREAS, the HDL Shareholders hold 11,880,000 shares of common stock of
HDL (the "HDL SHARES"), which constitute all of the issued and outstanding
shares of HDL.
WHEREAS, the HDL Shareholders and KCEC desire to effect the exchange of
the HDL Shares for 11,880,000 shares of common stock of KCEC (the "KCEC SHARES")
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
When used herein, the following terms shall have the meanings set forth
below:
"AFFILIATE" means, with respect to any given Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"ASSETS" means all properties, assets, Contracts, business, goodwill and
rights of a Person as a going concern, of every kind, nature, character and
description, tangible and intangible, wherever located and whether or not
carried or reflected on the books and records of a Person on the Closing Date.
"CONTRACT" means any contract, agreement, lease, license, arrangement,
commitment, sales order, purchase order or any claim or right or any benefit or
obligation arising thereunder or resulting therefrom and currently in effect,
whether oral or written.
"DOLLARS" and "$" means dollars in lawful currency of the United States of
America.
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"EMPLOYEE BENEFIT PLAN" means any (i) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(ii) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (iv) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended.
"EXPORT CONTROL LAWS" shall mean all laws, now or hereafter in effect, and
in each case as amended or supplemented from time to time, and any judicial or
administrative interpretations thereof, relating to the export or re-export of
commodities and technologies. Export Control Laws include, but are not limited
to, the Export Administration Act of 1979 (24 U.S.C. Sections 2401-2420); the
International Emergency Economic Powers Act (50 U.S.C. Sections 1701-1706); the
Trading with the Enemy Act (50 U.S.C. Sections 1 et seq); the Arms Export
Control Act (22 U.S.C. Sections 2778, 2779); and the International Boycott
Provisions of Section 999 of the Code.
"GAAP" shall mean generally accepted accounting principles in the United
States as of the date of this Agreement consistently applied.
"INTELLECTUAL PROPERTY" means any and all (i) inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (ii)
trademarks, service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) copyrightable works,
whether or not registered, all copyrights, and all applications, registrations,
and renewals in connection therewith, (iv) mask works and all applications,
registrations, and renewals in connection therewith, (v) trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, blueprints, sketches,
storyboards, models, engineering drawings, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and
proposals), (vi) computer software (including data and related documentation),
(vii) other proprietary rights and Know-how, (viii) copies and tangible
embodiments thereof (in whatever form or medium) and (ix) licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder.
"KNOW-HOW" means any and all technical knowledge, proprietary rights,
patented or unpatented inventions, trade secrets, analytical methodology,
processes, data and all other
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information or experience possessed by, as the case may be, KCEC or HDL, or
which KCEC or HDL have the right to use.
"LIABILITIES" means any direct or indirect liability, indebtedness, claim,
loss, damage, deficiency, obligation or responsibility, fixed or unfixed, xxxxxx
or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, known or unknown, contingent or otherwise.
"LIEN" means any mortgage, lien, pledge, charge, security interest,
license, lease, claim, restriction, option, conditional sale or installment
Contract or encumbrance of any kind.
"PERSON" shall include an individual, a partnership, a corporation, a
limited liability company or a division or business unit thereof, a trust, an
unincorporated organization, a government or any department or agency thereof
and any other entity.
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended.
ARTICLE II.
EXCHANGE OF SHARES
2.1. DELIVERY OF HDL SHARES. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, the HDL Shareholders shall sell,
transfer, assign and convey to KCEC, and KCEC shall acquire, the HDL Shares, and
the HDL Shareholders shall deliver to KCEC share certificates representing the
HDL Shares, duly endorsed to KCEC or accompanied by stock powers duly executed
in proper form for transfer.
2.2. ISSUANCE OF KCEC SHARES. In consideration of and in exchange for the
HDL Shares, KCEC shall, at the Closing, allot and issue to the HDL Shareholders,
and the HDL Shareholders shall acquire, the KCEC Shares, and KCEC shall deliver
to the HDL Shareholders share certificates representing newly issued KCEC
Shares.
2.3. ESCROW OF SHARES. Prior to the Closing, the HDL Shareholders shall
deliver to Xxxxx Xxxxxxx LLP (the "Escrow Agent") the certificate(s)
representing the HDL Shares and KCEC shall deliver to the Escrow Agent the
certificate(s) representing the KCEC Shares. The Escrow Agent shall release the
certificates representing the KCEC Shares to the HDL Shareholders and the
certificates representing the HDL Shares to KCEC upon Closing.
ARTICLE III.
CLOSING
3.1. CLOSING. The closing (the "CLOSING") of the transactions contemplated
hereby shall be held at the offices of Xxxxx Xxxxxxx LLP located at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m., local time, on or before
October 31, 2002 or within five (5) days after the conditions contained in
Articles VII and VIII have been satisfied or waived or at such other place and
time as may be agreed upon by the parties hereto. The time and date of the
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Closing is referred to herein as the "CLOSING DATE." At the Closing, in addition
to the exchange of the HDL Shares and the KCEC Shares, the parties hereto shall
deliver such certificates, opinions and other documents as are specified in
Articles VII and VIII.
3.2. TRANSFER TAXES. Each of the HDL Shareholders and KCEC, as the case
may be, shall be responsible for any transfer and similar taxes assessed or
payable by each of them in connection with the sale and transfer of the HDL
Shares or issuance of the KCEC Shares, as the case may be, and the transactions
contemplated hereby.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF HDL, THE HDL SHAREHOLDERS AND WANG
HDL, WANG AND the HDL Shareholders, jointly and severally, represent and
warrant to, and agree with, KCEC as follows:
4.1. ORGANIZATION.
(a) HDL is a corporation duly organized, validly existing and in
good standing under the laws of the Cayman Islands. HDL has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. HDL is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the property owned, leased or operated by HDL or the nature of the
business conducted by it makes such qualification necessary. HDL has heretofore
made available to KCEC true, accurate and complete copies of HDL's of Memorandum
and Articles of Association as in effect on the date hereof and minutes of all
meetings of the stockholders and directors of HDL held through and including the
date of this Agreement. HDL is not in violation of any of the provisions of its
Memorandum and Articles of Association.
(b) HDL has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors and, if necessary, the stockholders of HDL and no other
corporate proceedings on the part of HDL are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by HDL and constitutes the
legal, valid and binding obligations of HDL, enforceable against them in
accordance with its terms.
4.2. CAPITALIZATION. HDL has authorized capital stock of 160,000,000
shares of Common Stock, par value $0.30 per share, of which 11,880,000 shares
are issued and outstanding as of the date hereof. All issued and outstanding
shares of capital stock of HDL have been duly authorized, validly issued, fully
paid, nonassessable and are free of preemptive rights. There are no other
convertible securities, options, warrants, subscription calls or other rights or
agreements, arrangements or commitments obligating HDL to issue, transfer or
sell any of its securities. None of such issued and outstanding shares is the
subject of any voting trust
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agreement or other agreement relating to the voting thereof or restricting in
any way the sale or transfer thereof.
4.3. SHARE OWNERSHIP. The HDL Shareholders have full and valid title and
control of the HDL Shares free and clear of any Lien. None of the HDL Shares are
the subject of any voting trust agreement or other agreement relating to the
voting thereof or restricting in any way the sale or transfer thereof except for
this Agreement.
4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate any law, regulation, court order, judgment or decree, (ii) violate or
conflict with the Memorandum and Articles of Association of HDL, or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination or cancellation of any Contract, permit, license or franchise to
which HDL is bound or affected, except for conflicts, violations, breaches or
defaults which, in the aggregate, would not have a material adverse effect on
the business, operations, Assets, Liabilities, condition (financial or
otherwise), results of operations or prospects (a "MATERIAL ADVERSE EFFECT") of
HDL.
(b) The execution, delivery or performance of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
require any notice, report or other filing with any governmental authority,
domestic or foreign, or require any waiver, consent, approval or authorization
of any Person or any governmental or regulatory authority, domestic or foreign.
4.5. [Internationally Omitted.]
4.6. REAL AND PERSONAL PROPERTY. HDL has good and marketable title to, or
valid leasehold or license interests in, all real property or other Assets used
or held for use in the conduct of its business, including, without limitation,
the Assets reflected on its books and records or acquired after the date thereof
(other than those which have been disposed of in the ordinary course of business
since such date), free and clear of any Liens, other than Liens for taxes not
yet due and payable. All of the real property and Assets owned or leased by HDL
are in all material respects in working condition and repair, ordinary wear and
tear excepted.
4.7. NO UNDISCLOSED LIABILITIES. HDL has had no direct or indirect
Liabilities, whether due or to become due, or arising out of transactions
entered into, or any state of facts existing on the date hereof which would have
a Material Adverse Effect on HDL.
4.8. ABSENCE OF CERTAIN CHANGES. Since March 9, 2001, there has been no
material adverse change in the condition (financial or otherwise), Assets,
Liabilities, results of operations, business or prospects of HDL, and nothing
has occurred relative to the business or prospects of HDL which would have a
Material Adverse Effect on the future business of HDL.
4.9. LITIGATION. No material investigation or review by any governmental
entity or regulatory body, foreign or domestic, with respect to HDL is pending
or, to the knowledge
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of HDL, threatened against HDL, and no governmental entity or regulatory body
has advised HDL of an intention to conduct the same. There is no claim, action,
suit, investigation or proceeding pending or, to the knowledge of HDL,
threatened against or affecting HDL at law or in equity or before any federal,
state, municipal or other governmental entity or regulatory body, or which
challenges the validity of this Agreement or any action taken or to be taken by
HDL pursuant to this Agreement. As of the date hereof, HDL is not subject to,
nor is there in existence, any outstanding judgment, award, order, writ,
injunction or decree of any court, governmental entity or regulatory body
relating to HDL which would have a material adverse effect on HDL.
4.10. CONTRACTS. HDL has previously provided KCEC access to true, correct
and complete copies of all material Contracts to which HDL is a party. As to
such Contracts, (i) there are no existing breaches or defaults by HDL thereunder
or, to the knowledge of HDL, by the other parties to such Contracts; (ii) no
event, act or omission has occurred or, as a result of the consummation of the
transactions contemplated hereby, will occur which (with or without notice,
lapse of time or the happening or occurrence of any other event) would result in
a default by HDL thereunder or give cause for termination thereof, provided that
insofar as the foregoing representation involves the actions or omissions of
parties other than HDL, it shall be limited to the knowledge of HDL; (iii) none
of them will result in any loss to HDL upon completion or performance thereof;
and (iv) none of the parties to Contracts have expressed an indication to HDL of
their intention to cancel, renegotiate or exercise or not exercise any option
under any such Contracts as a result of the consummation of the transactions
contemplated hereby.
4.11. INTELLECTUAL PROPERTY.
(a) HDL owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the business of HDL as proposed to be conducted. HDL has taken all
commercially reasonable action to maintain and protect each item of Intellectual
Property that it owns or uses.
(b) HDL has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and HDL has not received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation or
violation (including any claim that HDL must license or refrain from using any
Intellectual Property rights of any third Person). To the knowledge of HDL, no
third party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of any of HDL.
4.12. LICENSES, PERMITS AND CONSENTS; COMPLIANCE WITH APPLICABLE LAW.
(a) HDL has all licenses and permits which individually or in the
aggregate are material to the conduct of the business of HDL or any of its
employees by reason of such employee's activities on behalf of HDL under
applicable law or by any federal, state, local or foreign governmental entity or
regulatory body for the operation of the business of HDL, and all of such listed
licenses and permits are in full force and effect as of the date hereof. HDL has
not received notice and, to the knowledge of HDL, there is no reason to believe,
that any appropriate authority intends to cancel or terminate any of such
licenses or permits or that valid grounds for such cancellation or termination
currently exist.
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(b) HDL is not in violation or breach of any, and the business and
operations of HDL comply in all material respects and are being conducted in
accordance with, all material governing laws, regulations and ordinances
applicable thereto and HDL is not in material violation of or in material
default under, any judgment, award, order, writ, injunction or decree of any
court, arbitration tribunal, governmental entity or regulatory body.
4.13. SECURITIES LAW ACKNOWLEDGMENTS. The HDL Shareholders acknowledge
that the KCEC Shares are, and will be, offered and sold to the HDL Shareholders
in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws. The HDL Shareholders will not sell or
otherwise transfer the KCEC Shares without registration under the Securities Act
or an exemption therefrom, and fully understand and agree that the HDL
Shareholders or any such transferee must bear the economic risk of holding the
KCEC Shares for an indefinite period of time because, among other reasons, the
KCEC Shares have not been registered under the Securities Act or under the
securities laws of certain states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless the securities are subsequently
registered under the Securities Act and under the applicable securities laws of
such states or unless an exemption from such registration is available in the
opinion of counsel for the holder, which counsel and opinion are reasonably
satisfactory to counsel for KCEC. The HDL Shareholders are acquiring the KCEC
Shares for the account of the HDL Shareholders for investment and not with a
view to resale or distribution except in compliance with the Securities Act.
4.14. REGULATION S EXEMPTION. Each HDL Shareholder understands that the
KCEC Shares are being offered and sold to it in reliance on an exemption from
the registration requirements of United States federal and state securities laws
under Regulation S promulgated pursuant to the Securities Act and that KCEC is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgements and understandings of each HDL Shareholder set
forth herein in order to determine the applicability of such exemptions and the
suitability of each HDL Shareholder to acquire the KCEC Shares. In this regard,
each HDL Shareholder represents, warrants and agrees that:
(a) Each HDL Shareholder is not a U.S. Person (as defined below) and
is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the
Seller. A "U.S. person" means any one of the following:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) any estate of which any executor or administrator is a U.S.
person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the United
States;
(vi) any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
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(vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States; and
(viii) any partnership or corporation if:
(1) organized or incorporated under the laws of any
foreign jurisdiction; and
(2) formed by a U.S. person principally for the purpose
of investing in securities not registered under the
Securities Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule
501(a) under the Securities Act) who are not natural
persons, estates or trusts.
(b) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, each HDL
Shareholder was outside of the United States.
(c) Each HDL Shareholder will not, during the period commencing on
the date of acquisition of the KCEC Shares and ending on the first anniversary
of such date, or such shorter period as may be permitted by Regulation S or
other applicable securities law (the "Restricted Period"), offer, sell, pledge
or otherwise transfer the shares in the United States, or to a U.S. person or
for the account or benefit of a U.S. person, or otherwise in a manner that is
not in compliance with Regulation S.
(d) Each HDL Shareholder will, after expiration of the Restricted
Period, offer, sell, pledge or otherwise transfer the KCEC Shares only pursuant
to registration under the Securities Act or an available exemption therefrom
and, in accordance with all applicable state and foreign securities laws.
(e) No HDL Shareholder has engaged in and prior to the expiration of
the Restricted Period will not engage in, any short selling of or any hedging
transaction with respect to the KCEC Shares within the United States, including
without limitation, any put, call or other option transaction, option writing or
equity swap.
(f) No HDL Shareholder nor any person acting on its behalf has
engaged, nor will, during the Restricted Period, engage in any directed selling
efforts to any U.S. person with respect to the Shares and each HDL Shareholder
and any person acting on its behalf have complied and will comply with the
"offering restrictions" requirements of Regulation S under the Securities Act.
(g) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.
(h) No HDL Shareholder nor any person acting on its behalf has
undertaken or carried out any activity for the purpose of, or that could
reasonably be expected to have the
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effect of, conditioning the market in the United States, its territories or
possessions, for any of the KCEC Shares. Each HDL Shareholder agrees not to
cause any advertisement of the Shares to be published in any newspaper or
periodical or posted in any public place and not to issue any circular relating
to the KCEC Shares, except such advertisements that include the statements
required by Regulation S under the Securities Act, and only offshore and not in
the United States or its territories, and only in compliance with any local
applicable securities laws.
(i) Each certificate representing the KCEC Shares shall be endorsed
with the following legends, in addition to any other legend required to be
placed thereon by applicable federal or state securities laws:
(A) "THE SHARES ARE BEING OFFERED TO INVESTORS WHO ARE
NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES
ACT")) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE
SECURITIES ACT."
(B) "TRANSFER OF THESE SHARES IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT
TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING
TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT."
(j) Each HDL Shareholder consents to KCEC making a notation on its
records or giving instructions to any transfer agent of KCEC in order to
implement the restrictions on transfer of the Shares set forth in this Section
4.14.
(k) Each HDL Shareholder agrees that it will not transfer the KCEC
Shares, and KCEC shall not be required to transfer the shares unless the
transferee executes a representation letter substantially in accordance with
Exhibit A hereto.
4.15. FINDER'S FEE. There is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf of,
HDL, who might be entitled to any fee or commission from HDL, KCEC or their
Affiliates upon the consummation of the transactions contemplated hereby.
4.16. ACCURACY OF REPRESENTATIONS. The representations and warranties made
by HDL, the HDL Shareholder and WANG in this Agreement, and in any certificate
or Schedule referenced hereby or attached hereto, do not contain, and will not
contain, any statement which is false or misleading with respect to any material
fact and do not and will not omit to state a
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material fact required to be stated herein or therein or necessary in order to
make the statements contained herein or therein not materially false or
misleading. There is no material fact or condition which could have a Material
Adverse Effect on HDL which has not been set forth in this Agreement or
described in the Schedules hereto.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF KCEC
KCEC, represents and warrants to, and agrees with, HDL and the HDL
Shareholders as follows:
5.1. ORGANIZATION; AUTHORITY.
(a) KCEC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. KCEC has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. KCEC is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the property owned, leased or operated by KCEC or the nature of the
business conducted by it makes such qualification necessary. KCEC has heretofore
made available to HDL true, accurate and complete copies of KCEC's Articles of
Incorporation and By-Laws as in effect on the date hereof and minutes of all
meetings of the stockholders and directors of KCEC held through and including
the date of this Agreement. KCEC is not in violation of any of the provisions of
its Articles of Incorporation or By-Laws.
(b) KCEC has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors and, if necessary, the stockholders of KCEC and no other
corporate proceedings on the part of KCEC are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
(c) This Agreement has been duly authorized, executed and delivered
by KCEC and constitutes the legal, valid and binding obligations of each of
them, enforceable against them in accordance with its terms. The issuance of the
KCEC Shares have been duly authorized by all required corporate action on the
part of KCEC. The KCEC Shares when issued and paid for in accordance with this
Agreement, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof and will be free and clear
of all Liens.
5.2. CAPITALIZATION. KCEC has authorized capital stock of 25,000,000
shares of Common Stock, no par value, of which 3,120,829 are issued and
outstanding as of the date hereof. A copy of the current stockholder list is
attached hereto as Schedule 5.2. All issued and outstanding shares of capital
stock of KCEC have been duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no convertible
securities, options, warrants, subscription calls or other rights or agreements,
arrangements or commitments
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obligating KCEC to issue, transfer or sell any of its securities other than as
provided for in Section 8.5 hereto. All of such shares have been issued in
compliance with all Federal and State securities law. None of such issued and
outstanding shares is the subject of any voting trust agreement or other
agreement relating to the voting thereof or restricting in any way the sale or
transfer thereof.
5.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate any law, regulation, court order, judgment or decree, (ii) violate or
conflict with the Articles of Incorporation or By-Laws of KCEC, or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination or cancellation of any Contract, permit, license or franchise to
which KCEC is bound or affected, except for conflicts, violations, breaches or
defaults which, in the aggregate, would not have a Material Adverse Effect on
KCEC.
(b) The execution, delivery or performance of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
require any notice, report or other filing with any governmental authority,
domestic or foreign, or require any waiver, consent, approval or authorization
of any Person or any governmental or regulatory authority, domestic or foreign.
5.4. SEC REPORTS; FINANCIAL STATEMENTS.
(a) KCEC has previously delivered to HDL true and complete copies of
its Form 10-SB dated June 29, 1999, Form 10-KSB for the fiscal year ended June
30, 2001 and its Forms 10-QSB for the quarters ended December 31, 2001 and March
31, 2002 (the "SEC REPORTS"), and all other documents (other than preliminary
material) that KCEC was required to file with the SEC since the effective date
of its Form 10-SB. Prior to the Closing Date, KCEC will have furnished HDL with
true and complete copies of any additional SEC Reports required to be filed by
KCEC, if any, with the SEC prior to the Closing Date. As of their respective
filing dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be, and
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed SEC Document.
(b) The financial statements of KCEC, including the notes thereto,
included in the SEC Reports, comply as to form in all material respects with
applicable accounting requirements and with respect to the published regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles consistently applied and fairly present the
financial position of KCEC at the dates thereof and for the periods to which
they relate.
(c) Except and as to the extent reflected in the March 31, 2002
balance sheet of KCEC included in its March 31, 2002 10-QSB, KCEC did not have
any direct or indirect Liabilities, whether due or to become due, or arising out
of transactions entered into, or any state
11
of facts existing, on or prior to March 31, 2002 which would be required to be
reflected on the March 31, 2002 balance sheet in accordance with GAAP.
5.5. REAL AND PERSONAL PROPERTY.
(a) KCEC does not own any real property or lease any property which
is material to the operation of its business, would result in any material
liability if the lease were terminated prior to the expiration of the term
thereof or would interfere with the business of KCEC if it was required to
vacate such premises.
(b) KCEC has good and marketable title to, or valid leasehold or
license interests in, all other Assets used or held for use in the conduct of
its business, including, without limitation, the Assets reflected on the books
and records or acquired after the date thereof (other than those which have been
disposed of in the ordinary course of business since such date), free and clear
of any Liens, Liens reflected on its books and records and Liens for Taxes not
yet due and payable. All of the Assets owned or leased by KCEC are in all
material respects in good condition and repair, ordinary wear and tear excepted,
and well maintained. There are no material capital expenditures currently
contemplated or necessary to maintain the current business of KCEC.
5.6. NO UNDISCLOSED LIABILITIES. Except as set forth in KCEC's financial
statements KCEC had no direct or indirect Liabilities, whether due or to become
due, or arising out of transactions entered into, or any state of facts
existing, on the date hereof.
5.7. ABSENCE OF CERTAIN CHANGES. Since June 30, 2001 there has been no
material adverse change in the condition (financial or otherwise), Assets,
Liabilities, results of operations, business or prospects of KCEC, and nothing
has occurred relative to the business or prospects of KCEC which would have a
Material Adverse Effect on the future business of KCEC.
5.8. TAX MATTERS. KCEC has filed all tax returns required to be filed by
it (or has filed appropriate extensions therefor), has paid all taxes due
whether identified on the tax returns or otherwise, and has made appropriate
provision in the KCEC Financial Statements for any taxes not yet due, and all
such tax returns were true, correct and complete. None of the tax returns
described in the preceding sentence or otherwise filed by or on behalf of KCEC
contains or will contain a disclosure statement under Section 6661 of the Code
or any similar provision of state, local, foreign or other law. No assets of
KCEC, and no Assets used in the business of KCEC, are subject to any Liens for
taxes.
5.9. ENTIRE BUSINESS. No portion of the business of KCEC is conducted by
any Affiliate of KCEC or any third party and all of the Assets necessary for the
conduct of the business of KCEC as presently conducted are owned by KCEC. All
such Assets are exclusively owned or leased and used by KCEC and its customers.
5.10. LITIGATION. No material investigation or review by any governmental
entity or regulatory body, foreign or domestic, with respect to KCEC is pending
or, to the knowledge of KCEC, threatened against KCEC, and no governmental
entity or regulatory body has advised KCEC of an intention to conduct the same.
There is no claim, action, suit, investigation or proceeding pending or, to the
knowledge of KCEC, threatened against or affecting KCEC at law
12
or in equity or before any federal, state, municipal or other governmental
entity or regulatory body, or which challenges the validity of this Agreement or
any action taken or to be taken by KCEC pursuant to this Agreement. As of the
date hereof, KCEC is not subject to, nor is there in existence, any outstanding
judgment, award, order, writ, injunction or decree of any court, governmental
entity or regulatory body relating to KCEC which would have a Material Adverse
Effect on KCEC.
5.11. EMPLOYEE BENEFIT PLANS. KCEC does not maintain or contribute to, or
is required to maintain or contribute to any Employee Benefit Plan. To the
knowledge of KCEC, KCEC does not contribute to, ever has contributed to, or ever
has been required to contribute to, any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan. KCEC does not
maintain or ever has maintained or contribute, ever has contributed, or ever has
been required to contribute to any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Section 4980B).
5.12. CONTRACTS. KCEC has previously made available to HDL access to true,
correct and complete copies of all material Contracts to which KCEC is a party.
As to such Contracts, (i) there are no existing breaches or defaults by KCEC
thereunder or, to the knowledge of KCEC, by the other parties to such Contracts;
(ii) no event, act or omission has occurred or, as a result of the consummation
of the transactions contemplated hereby, will occur which (with or without
notice, lapse of time or the happening or occurrence of any other event) would
result in a default by KCEC thereunder or give cause for termination thereof,
provided that insofar as the foregoing representation involves the actions or
omissions of parties other than KCEC, it shall be limited to the knowledge of
KCEC; (iii) none of them will result in any loss to KCEC upon completion or
performance thereof; and (iv) none of the parties to Contracts have expressed an
indication to KCEC of their intention to cancel, renegotiate or exercise or not
exercise any option under any such Contracts as a result of the transactions
contemplated hereby.
5.13. INTELLECTUAL PROPERTY.
(a) KCEC owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the businesses of KCEC and as proposed to be conducted. KCEC has
taken all necessary action to maintain and protect each item of Intellectual
Property that it owns or uses.
(b) To the best knowledge of KCEC, KCEC has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties and KCEC has not received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation or violation (including any claim that either
KCEC must license or refrain from using any Intellectual Property rights of any
third Person). To the knowledge of KCEC, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any Person.
13
5.14. LICENSES, PERMITS AND CONSENTS; COMPLIANCE WITH APPLICABLE LAW.
(a) KCEC has all licenses and permits which individually or in the
aggregate are material to the conduct of the business of KCEC or any of its
employees by reason of such employee's activities on behalf of KCEC under
applicable law or by any federal, state, local or foreign governmental entity or
regulatory body for the operation of the business of KCEC, and all of such
listed licenses and permits are in full force and effect as of the date hereof.
KCEC has not received notice and, to the knowledge of KCEC, there is no reason
to believe, that any appropriate authority intends to cancel or terminate any of
such licenses or permits or that valid grounds for such cancellation or
termination currently exist.
(b) KCEC is not in violation or breach of any, and the business and
operations of KCEC comply in all material respects and are being conducted in
accordance with, all governing laws, regulations and ordinances applicable
thereto and KCEC is not in violation of or in default under, any judgment,
award, order, writ, injunction or decree of any court, arbitration tribunal,
governmental entity or regulatory body.
5.15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS KCEC and its respective
predecessors have at all times complied with, and KCEC is presently in
compliance with, all environmental, health, and safety requirements required by
applicable law.
5.16. FINDER'S FEE. There is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf of,
KCEC or their respective Affiliates who might be entitled to any fee or
commission from KCEC, HDL or their respective Affiliates upon the consummation
of the transactions contemplated hereby or thereafter.
5.17. ACCURACY OF REPRESENTATIONS. The representations and warranties made
by KCEC in this Agreement, and in any certificate or Schedule referenced hereby
or attached hereto, do not contain, and will not contain, any statement which is
false or misleading with respect to any material fact and do not and will not
omit to state a material fact required to be stated herein or therein or
necessary in order to make the statements contained herein or therein not
materially false or misleading. There is no material fact or condition which
could have a Material Adverse Effect on KCEC which has not been set forth in
this Agreement or described in the Schedules hereto.
ARTICLE VI.
COVENANTS
6.1. CONDUCT OF BUSINESS OF KCEC AND HDL. From the date hereof to the
Closing Date, each of HDL and KCEC, shall:
(i) conduct its business only in the ordinary course and in
substantially the same manner as heretofore conducted;
(ii) maintain and keep its Assets in good repair, working order and
condition, except for ordinary wear and tear;
14
(iii) use its best efforts to maintain and preserve its business
organization intact, retain its present employees so that they will be
available after the Closing Date, and maintain its relationships with its
customers so that they will be preserved after the Closing Date; and
(iv) not take any action which would cause the representations and
warranties set forth herein to be untrue or which would have a Mutual
Adverse Effect on the business of HDL or KCEC, as the case may be.
6.2. NO SOLICITATION. Neither HDL or KCEC shall, and each shall direct and
otherwise cause their respective officers, directors, partners, financial
advisors, counsel, agents and Affiliates of such party not to, (i) directly or
indirectly solicit, encourage or facilitate (including by way of furnishing any
non-public information concerning HDL or KCEC, as the case may be) the
submission of proposals or offers from any Person other than HDL and KCEC
relating to any acquisition or purchase of all or a material part of the stock
or assets of, or any merger, consolidation or business combination with, HDL or
KCEC, as the case may be (an "ACQUISITION PROPOSAL"), or (ii) participate in any
discussions or negotiations regarding, or furnish any non-public information to
any Person other than the other parties hereto in connection with, any
Acquisition Proposal by any Person other than HDL, KCEC or their respective
Affiliates, as the case may be.
6.3. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing Date, HDL, on
the one hand, and KCEC, on the other hand, shall give to the other(s) and their
respective lenders, officers, directors, financial advisors, counsel and other
agents access to all offices of HDL or KCEC, as the case may be, and to all of
its respective books and records, permit them to make such inspections as they
may require and shall cause HDL's or KCEC's respective officers, directors and
employees to furnish the other(s) and their prospective lenders, officers,
directors, financial advisors, counsel and other agents with such financial and
operating data and other information with respect to the business and properties
of HDL and KCEC or their prospective lenders, officers, directors, financial
advisors, counsel and other agents may from time to time reasonably request, and
as may be necessary to establish the performance by the parties hereto of their
covenants under this Agreement and the accuracy of their representations and
warranties herein, and in connection with the preparation of any filing or
submission to any governmental entity or regulatory body.
(b) HDL, on the one hand, and KCEC, on the other hand, shall hold,
and shall use commercially reasonable efforts to cause their respective
officers, directors, partners, prospective lenders, financial advisors, counsel
and other agents to hold, in strict confidence, unless compelled to disclose by
judicial or administrative process, or, in the opinion of their counsel, by
other requirements of law, all documents and information concerning HDL or KCEC,
as the case may be, furnished to the other in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (i) in the public domain through no fault of HDL or any of
their respective Affiliates on the one hand, or KCEC or any of their Affiliates,
on the other hand; or (ii) later lawfully acquired without the breach of any
other agreement by a party hereto or their respective officers, directors,
partners, financial advisors, counsel and other agents from other sources) and
will not
15
release or disclose such information to any other Person, except its officers,
directors, prospective lenders, financial advisors, counsel and other agents in
connection with this Agreement. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained as
hereinbefore provided, and, if requested by any party hereto case may be, the
other(s) will, and will cause its officers, directors, partners, prospective
lenders, financial advisors, counsel and other agents to, return to the
requesting party all copies of written information furnished by or on its behalf
to the other(s) or their respective officers, directors, prospective lenders,
financial advisors, counsel and other agents.
6.4. BEST EFFORTS. Subject to the terms and conditions herein provided,
each party hereto agrees to use commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, including
making all required submissions or filings with governmental entities and
regulatory bodies, to consummate and make effective the transactions
contemplated by this Agreement. If, at any time after the Closing Date, any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto or their officers, directors or representatives
shall take all such necessary action. Each party hereto shall execute any
additional instruments necessary to consummate the transactions contemplated
hereby.
6.5. CONSENTS. Each party hereto shall use their best efforts to obtain,
at its expense, all consents, approvals and waivers of third Persons or
governmental entities or regulatory bodies required to consummate the
transactions contemplated hereby.
6.6. PUBLIC ANNOUNCEMENTS. Each of the parties hereto will consult with
one another before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby and shall not,
except as may be required by law or any listing agreements with any national
securities exchange, issue any such press release or make any such public
statement without the approval of one another.
6.7. CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. From the
date hereof until the Closing Date, each of the parties shall use their
respective best efforts to conduct such parties' affairs in such a manner so
that, except as otherwise contemplated or permitted by this Agreement, the
representations and warranties contained in Articles III and IV shall continue
to be true and correct on and as of the Closing Date as if made on the Closing
Date and the parties shall promptly notify the others of any event, condition or
circumstance occurring from the date hereof through the Closing Date that would
constitute a violation or breach such party of any of such representations and
warranties.
6.8. EXPENSES. Except as otherwise provided herein, whether or not the
transactions contemplated hereby are consummated, all expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
the obligation of the party incurring such expenses.
6.9. RECAPITALIZATION. Prior to the Closing Date, KCEC shall effect a 50
to 1 reverse split of its issued and outstanding capital stock.
6.10. POST EXCHANGE CAPITALIZATION. Immediately following the Closing
Date, the capitalization of KCEC, on a fully diluted basis, shall be as set
forth in Schedule 6.10.
16
ARTICLE VII.
CONDITIONS PRECEDENT TO PERFORMANCE
OF KCEC
The obligations of KCEC under this Agreement are subject to the following
conditions which may be waived in whole or in part by KCEC at their election:
7.1. BRING DOWN OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of HDL and the HDL Shareholders in this Agreement shall be true and
correct in all material respects on the date hereof and shall also be true and
correct in all material respects on the Closing Date with the same force and
effect as if made on and as of the Closing Date, and HDL and the HDL
Shareholders shall have performed or complied in all material respects with all
agreements, conditions and covenants required by this Agreement to be performed
or complied with by them on or before the Closing Date.
7.2. AUTHORITY. HDL shall have delivered to KCEC a certificate of the
Secretary of HDL, certifying to the resolutions of the Board of Directors of HDL
authorizing the transactions contemplated hereby and certifying that such
resolutions have not been revoked, suspended or amended and remain in full force
and effect. KCEC shall have received all documents it may reasonably request
relating to the existence of HDL and the authority of HDL to enter into this
Agreement and to consummate the transactions contemplated hereby.
7.3. MATERIAL ADVERSE CHANGES. There shall not have been, and on the
Closing Date there shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in, any material adverse
change in the condition (financial or otherwise), Assets, Liabilities, results
of operations, business or prospects of HDL, and KCEC shall have received a
certificate of the President of HDL to the foregoing effect.
7.4. CONSENTS. HDL shall have obtained all approvals, authorizations and
consents required to consummate the transactions contemplated hereby upon terms
and subject to conditions satisfactory to KCEC in its sole discretion and such
approvals, authorizations and consents shall be in full force and effect. KCEC
shall have been furnished with appropriate evidence, reasonably satisfactory to
it and its counsel, of the granting of such approvals, authorizations and
consents.
7.5. INJUNCTION. There shall be no effective injunction, writ or
preliminary restraining order of any nature issued by a court or governmental
agency of competent jurisdiction directing that the transactions provided for
herein or any of them not be consummated as herein provided or which is
reasonably likely to have any material adverse effect of the condition
(financial or otherwise), Assets, Liabilities, results of operations, business
or prospects of HDL, taken as a whole.
17
ARTICLE VIII.
CONDITIONS PRECEDENT TO PERFORMANCE
OF HDL AND THE HDL SHAREHOLDERS
8.1. BRING DOWN OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of KCEC contained in this Agreement shall be true and correct in all
material respects on the date hereof and shall also be true and correct in all
material respects on and as at the Closing Date with the same force and effect
as if made on and as of the Closing Date, and KCEC shall have performed or
complied in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by them on or before
the Closing Date. HDL shall have received a certificate of the President of KCEC
to the foregoing effect.
8.2. AUTHORITY. KCEC shall have delivered to HDL a certificate of the
Secretary of KCEC certifying to the resolutions of the Board of Directors of
KCEC authorizing the transactions contemplated hereby and certifying that such
resolutions have not been revoked, suspended or amended and remain in full force
and effect. HDL shall have received all other documents it may reasonably
request relating to the existence of KCEC and the authority of KCEC to enter
into this Agreement and to consummate the transactions contemplated hereby.
8.3. RELEASES. KCEC shall have received releases from each of its
directors and officers from all claims which such directors and officers may
have against KCEC as of the Closing Date.
8.4. PURCHASE AGREEMENT. As of Closing, KCEC shall have entered into an
agreement with Concourse Financial, Inc. ("Concourse") pursuant to which
Concourse shall, on a best efforts basis, purchase up to 6,000,000 shares of
common stock of KCEC pursuant to Rule 903 of Regulation S under the Securities
Act of 1933.
8.5. CONSENTS. All approvals, authorizations and consents required by KCEC
to consummate the transactions contemplated hereby shall have been obtained on
terms and conditions satisfactory to HDL in its sole discretion and shall be in
full force and effect, and HDL shall have been furnished with appropriate
evidence, reasonably satisfactory to it and its counsel, of the granting of such
approvals, authorizations and consents.
8.6. INJUNCTION. There shall be no effective injunction, writ or
preliminary restraining order of any nature issued by a court or governmental
agency of competent jurisdiction directing that the transactions provided for
herein or any of them not be consummated as herein provided.
ARTICLE IX.
NATURE AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
All statements contained herein or in any certificate, schedule or other
document delivered pursuant hereto shall be deemed representations and
warranties by the party delivering
18
the same. All representations and warranties and covenants shall survive the
Closing Date. All representations and warranties contained in this Agreement and
in the disclosure schedules or in any certificates or other documents delivered
pursuant hereto shall not be deemed to be waived or otherwise affected by any
prior knowledge of, or any investigation made by or on behalf of, any party
hereto. All covenants and agreements shall survive the consummation of the
transactions contemplated hereby.
ARTICLE X.
INDEMNIFICATION
(a) HDL and the HDL Shareholders hereby agree to indemnify and hold
harmless KCEC and its respective Affiliates from and against any Liabilities,
damages, losses, claims, Liens, costs or expenses (including reasonable
attorneys' fees) of any nature (any or all of the foregoing are herein referred
to as "LOSS") insofar as a Loss (or actions in respect thereof), whether
existing or accruing prior or subsequent to the Closing Date, arises out of or
is based upon any misrepresentation (or alleged misrepresentation) or breach (or
alleged breach) of any of the warranties, covenants or agreements made by HDL
and the HDL Shareholders in this Agreement or in any certificate, Schedule,
document or Exhibit referenced hereby or attached hereto.
(b) KCEC hereby agrees to indemnify and hold harmless HDL and the
HDL Shareholders from and against any Liabilities, damages, losses, claims,
Liens, costs or expenses (including reasonable attorneys' fees) of any nature
insofar as a Loss (or actions in respect thereof), whether existing or accruing
prior or subsequent to the Closing Date, arises out of or is based upon any
misrepresentation (or alleged misrepresentation) or breach (or alleged breach)
of any of the warranties, covenants or agreements made by KCEC in this Agreement
or in any certificate, Schedule, document or Exhibit referenced hereby or
attached hereto.
ARTICLE XI.
TERMINATION; AMENDMENT; WAIVER
11.1. TERMINATION. This Agreement and the transactions contemplated hereby
may be terminated at any time prior to the Closing:
(a) by mutual written agreement of HDL, the HDL Shareholders and
KCEC;
(b) by HDL and the HDL Shareholders, on the one hand, or KCEC, on
the other hand, as the case may be, if the Closing shall not have occurred on or
before October 31, 2002 so long as the party terminating this Agreement pursuant
to this Section 11.1 has not made any material misrepresentation or materially
breached a covenant, agreement or warranty contained herein;
(c) by KCEC, on the one hand, or HDL and the HDL Shareholders, on
the other hand, if (i) the transactions contemplated hereby shall violate any
non-appealable final
19
order, decree or judgment of any court or governmental entity or regulatory body
having competent jurisdiction or (ii) there shall be a statute, rule or
regulation which makes the transactions contemplated hereby illegal or otherwise
prohibited; or
(d) by HDL and the HDL Shareholders, on the one hand, and KCEC, on
the other hand, in the event the other makes a material misrepresentation or
breaches a covenant, agreement or warranty set forth in this Agreement, but such
non-misrepresenting or non-breaching party's election to terminate shall not
limit, waive or prejudice such party's remedies at law or in equity.
In the event this Agreement is terminated as provided in Section 11.1(a),
(b) or (c), this Agreement shall become void and of no further force and effect
and no party hereto shall have any further liability to any other party hereto,
except that Sections 4.18, 5.16, 6.2, 6.3, 6.6 and 6.8 shall survive and
continue in full force and effect notwithstanding termination.
11.2. AMENDMENT. This Agreement may be amended by action taken by the
parties hereto by an instrument in writing.
11.3. EXTENSION; WAIVER. At any time prior to the Closing Date, HDL, the
HDL Shareholders, KCEC may (i) extend the time for the performance of any of the
obligations or other acts of the other; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto or thereto; and (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by or on behalf of such party.
ARTICLE XII.
MISCELLANEOUS
12.1. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with all
Schedules and Exhibits, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, among the parties or between any of
them with respect to the subject matter hereof. All references to Sections,
Exhibits and Schedules shall be deemed references to such parts of this
Agreement unless the text requires otherwise. This Agreement shall not be
assigned by operation of law or otherwise.
12.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made as of
the date delivered or mailed if delivered in person, by telecopy, cable,
telegram or telex, or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
if to KCEC:
20
Kid Castle Educational Corporation
0xx Xxxxx, 000-0 Xxxx-Xxxxxx Xxxx
Xxxxxx, Xxxxxx, X.X.X.
Fax:
Attn:
with a copy to:
Xxxx Xxxx of Counsel
5 Fl., 000, Xxx - Xxx X. Xx., XXX 0
Xxxxxx 000, Xxxxxx
R.O.C.
Fax: ( )
Attn:
if to HDL:
Higoal Developments Limited
X.X. Xxx 0000
Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Fax:
Attn:
with a copy to:
Xxxxxxx Xxxx & Xxxxxxx
0000, Xxx Xxxxxxxx Xxxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxx Xxxx
Fax: (000) 0000-0000 or (000)0000-0000
Attn: Xxxxxxxxxx Xxxx
or to such other address as the Person to whom notices is given may have
previously furnished to the others in writing in the manner set forth above.
12.3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
applicable principles of conflicts of laws thereof.
12.4. PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, its successors and assigns.
12.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
12.6. SPECIFIC PERFORMANCE. Irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with the terms
hereof, and the parties shall
21
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
12.7. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Schedules shall be deemed adequate to disclose an exception to a representation
or warranty made herein unless the Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant.
12.8. SEVERABILITY. The provisions of this Agreement are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of a provision contained therein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement and the terms thereof shall be reformed
and construed as if such invalid or illegal or unenforceable provision, or part
of a provision, had never been contained herein, and such provisions or part
reformed so that it would be valid, legal and enforceable to the maximum extent
possible.
12.9. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
22
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, or
individually, as the case may be, all as of the day and year first above
written.
HIGOAL DEVELOPMENTS LIMITED
By: /s/ Xxxx Xxx An
-------------------------------------
Name: Xxxx Xxx An
Title:
KID CASTLE EDUCATIONAL CORPORATION
By: /s/ Chien Xxx Xxx
-------------------------------------
Name: Chien Xxx Xxx
Title:
HDL SHAREHOLDERS
By: /s/ Xxxx Xxx An
-------------------------------------
Name: Xxxx Xxx An
Title: As Agent for each of the
HDL Shareholders
23
SCHEDULE 6.10
POST EXCHANGE CAPITALIZATION
HDL 11,880,000
Investor Group 3,120,000
Concourse & Designees 6,000,000
24
